Is your business facing a crisis? Keep calm and read on.
Time is of the essence. You need to shortlist your worthwhile funding options, while writing off any that aren’t even worth pursuing.
To help you make the most informed decision possible, here is your small business funding 911 guide.
This is probably not worth your time, unless you have an absolutely incredible relationship with your bank and millions of dollars in your account.
Bank loans can take weeks or even months to process, even for the most qualified and thriving small businesses. There are many hoops to jump through, many documents to provide, and many forms to fill out.
If your crisis is time-sensitive, you’re best to look elsewhere.
Small Business Association (SBA) Loans
The SBA does offer a disaster assistance loan for people who have seen their home or their business ravaged by natural disasters such as hurricanes, earthquakes or floods. However, if your disaster is more local or less literal, you will not qualify.
They do offer other loans. However, the process of getting one is nearly as lengthy as going through a bank. Even with experts providing SBA loan application assistance to speed things along, you could be facing a few weeks’ worth of work.
A Merchant Cash Advance
If time is of the essence and your window to survive is measured in days instead of weeks, you might consider looking into a merchant cash advance (MCA). In some cases, your application can be done completely online and you can have an answer within 24 hours, and get your cash by the next business day.
An MCA is not a loan, it is a form of funding. You would repay the advance via a small percentage of your transactions and income. So, if your sales are a little bit slower while you get back on your feet, you will be making small payments.
Business Credit Cards
If you already have a business credit card, you might consider using it now to inject some money into the business. If you don’t already have one, applying and receiving one in time could be an issue.
The major risk with using a business credit card to deal with an emergency situation, like fixing or replacing big-ticket equipment, is the amount of personal exposure you’re potentially opening yourself up to.
Most business credit cards are secured, which means a personal guarantee has been signed by the business owner (i.e. you) or a personal asset has been put up as collateral (i.e. your house or car).
That means that if these funds don’t save your business, you could be personally on the hook for repaying the balance, or losing something very valuable to do it. You should only consider this if you’re positive this move will not ravage your credit or your personal finances.
You have options, but as you can see, some are better than others. Most traditional lending institutions are not known for their expediency, so they’re not really there for you in an urgent financial crisis.